TIDMTPG
RNS Number : 9006V
TP Group PLC
16 December 2021
This announcement contains inside information
TP Group plc
("TPG", "TP Group" or "the Company")
Business Update and Standby Credit Facility from Science
Group
The future strategy for TP Group was set out in the announcement
on 1 November 2021. For the financial year to 31 December 2021, the
Group's underlying trading continues to be satisfactory and the
underlying forecast from the operating businesses remains broadly
in line with management expectations. This performance during a
period of uncertainty and change is a credit to the Group's
operating managers.
As outlined in the update on 1 November 2021, TP Group has
incurred exceptional costs totaling GBP2.1 million. Additional
exceptional costs are anticipated to be incurred in the current
financial year. These exceptional items are anticipated to include
further provisions against potential liabilities related to certain
historic contracts in TPG Maritime. In addition, an impairment of
goodwill and intangibles is anticipated.
The Group's core UK business operations are now being refocused
and 2022 planning is underway. The review of the non-core
operations is progressing and an advisor has been appointed to
assist with this on, in contrast to the model adopted earlier in
the year, a fee structure based primarily on a successful result
for the Company.
Standby Credit Facility from Science Group
The filing of the TP Group subsidiary statutory accounts has
been delayed due to discussions with the Group's auditors in
relation to the going concern commentary contained within the TP
Group Annual Report being replicated in the subsidiary account
filings.
In parallel, as previously reported, certain payments, including
deferred consideration related to the Osprey acquisition, advisor
fees and the termination payment to the former CEO, were deferred
(or paid in equity warrants) in Q2/Q3 to assist cash flow, some of
which extend into 2022. While these cash deferrals have enhanced
cash headroom, discussions with the Group's bank in regard to (i) a
relaxation of covenant tests; (ii) an increase in the facility and
(iii) an extension of the facility beyond March 2023 have been
undertaken. Unfortunately, while the bank has remained
constructive, without additional external funding, the Company's
bank was unwilling to provide additional support or
flexibility.
Since its first approach, Science Group has been consistent that
its investment in TP Group was made as a long-term, financially
strong, strategic partner. Accordingly, following the recent Board
changes, Science Group offered TP Group a standby loan facility to
provide additional cash headroom to allow the TP Group Board to
execute the new strategy and to provide reassurance in relation to
auditor's reports. The independent directors of TP Group have
welcomed this supportive arrangement and an agreement has now been
negotiated between the parties on arms-length commercial terms
appropriate to such a facility.
While it is hoped that this facility will not be required to be
used, this is a prudent and appropriate measure to provide
additional headroom. In summary, the Revolving Credit Facility
provided by Science Group is for up to GBP5 million for a period to
30 September 2023. The terms of the facility, which reflect the
unsecured standby revolving nature of the arrangement, include a
set-up fee of 3%, interest rate on drawn amounts of 1% per month
and a rate of 0.4% per month of any undrawn amount, both subject to
the Sterling Overnight Index Average remaining below 1%. The
facility can be cancelled or refinanced by TP Group at any time and
without penalty or early termination charges.
As a result of Science Group providing the additional finance
facility, the Company's bank has now agreed to amend and ease
covenants and also to extend the term of the existing GBP7m
Revolving Credit Facility to 30 September 2023.
The Science Group facility is a related party transaction. As
such, the TP Group independent directors, having consulted with the
Company's nominated adviser, consider that the terms of the
facility are fair and reasonable insofar as TP Group shareholders
are concerned. As directors of both companies, Martyn Ratcliffe and
Peter Bertram, have not participated in the decisions of the Boards
of either TP Group or Science Group in relation to the
facility.
In the view of the TP Group independent directors, entering into
the GBP5m Revolving Credit Facility provided by Science Group has
the following important benefits.
-- It provides additional cash headroom that it is anticipated
should enable the Company's auditors to agree a clean going concern
statement for the 2020 subsidiary statutory accounts and the 2021
Group accounts.
-- It may be needed to help fund the previously reported
deferred consideration related to the Osprey acquisition, advisor
fees and the termination payment to the former CEO.
-- It enabled the Company to renegotiate a 6 month extension to
its existing GBP7m Revolving Credit Facility with HSBC, together
with a significant relaxation of banking covenants.
-- In the event of a late payment by a major customer, it avoids
the concerns that can result from a short-term cashflow
shortfall.
-- It enables the Board to focus on executing the Group's
strategy as set out in the statement on 1 November 2021.
Remuneration Committee Disclosure Omission
In recent weeks, it has come to light that in October 2019, the
Remuneration Committee of the TP Group Board introduced change of
control provisions in the contracts of the Executive Directors that
were engaged at that time. The effect of these provisions was to
increase the notice period from 1 year to 2 years in such event.
This change was omitted from the Remuneration Committee report
within the Company's Annual Reports for 2019 and 2020 but will be
properly disclosed in future Remuneration Committee reports to
shareholders.
For further information, please contact:
TP Group plc Tel: 01753 285 810
Derren Stroud, Chief Financial Officer
www.tpgroup.uk.com
Cenkos Securities plc Tel: 020 7397 8980
Stephen Keys / Mark Connelly / Callum
Davidson
www.cenkos.com
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December 16, 2021 05:26 ET (10:26 GMT)
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